They spoke Tuesday at the National Press Club in Washington, D.C. But critics of the liberal USCAP dismissed cap and trade as unsuccessful, noting that many European firms that had first embraced the idea are now rejecting it because of its high costs. Critics also noted that the press conference was dominated by liberal activist groups.
While the economy suffers from the financial crisis affecting the banking and credit sectors, some lawmakers may not want to enact new, costly regulations, USCAP members said at the press conference.
Nonetheless, USCAP insisted that raising the cost of carbon emissions through regulation would spur technological innovations and boost economic performance.
Under cap and trade, electric utilities, manufacturers, and other firms would be limited in the amount of carbon dioxide they could release into the air. Companies that emitted more than their prescribed limit would then have to buy “carbon allowances” in a government-contrived system from companies that had carbon credits.
Simply, if they pollute beyond their “cap,” they would have to “trade” for, i.e., buy, credits in companies that produce more environmentally friendly products. Theoretically, for instance, a coal plant that exceeded its cap, would have to trade off its excess pollution for credits in a company that makes windmills.
The actual greenhouse gas emissions are not truly reduced – they were emitted. But green companies, which allegedly produce lower emissions, get a boost.
Most recently, a bill co-sponsored by Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.) that would impose cap and trade, was withdrawn from the Senate floor in June when it fell 12 votes shy of what was needed to surmount a filibuster.
But with President-elect Barack Obama now supportive of his own cap-and-trade proposal, the dynamic has changed, and apparently for the better, Frances Beinecke, president of the liberal Natural Resources Defense Council (NRDC), told CNSNews.com.
“We are greatly encouraged by the new leadership coming into office,” said Beinecke. “Since the president-elect has announced his goals, the Democratic leadership will have to respond, and it might be possible to pull over some Republicans.”
Sen. John McCain (R-Ariz.), the Republican nominee for president in 2008, has exhibited leadership in the past with regard to climate change legislation and could potentially influence other senators on his side of the aisle in 2009, said Beinecke.
In a Nov. 18 video message to governors attending a summit on global warming in California, organized by that state’s GOP governor, Arnold Schwarzenegger, Obama outlined his own federal proposal.
“We will establish strong annual targets that set us on a course to reduce emissions to their 1990 level by 2020 and reduce them an additional 80 percent by 2050,” said Obama. “Further, we will invest $15 billion each year to catalyze private sector efforts to build a clean energy future.”
The “triple threat” to America over the long-term on the economic, environmental, and energy fronts are inter-connected and must be addressed in a comprehensive way, Beinecke said at the National Press Club. Investments in “clean, green jobs,” in combination with limits on greenhouse emissions, can open the way to a re-energized economy and a healthy climate for future generations, she said.
David Crane, president and CEO of NRG Energy, a power-generation company based in Princeton, N.J., told audience members that the transition away from a carbon-based economy to one more reliant on clean energy sources is similar in scope to the movement away from the “horse and buggy” to the internal combustion engine.
Crane, who described himself as a “dyed-in-the-wool free market capitalist,” said a price on carbon is needed so that market forces will respond and embrace alternative technologies.
The cap-and-trade policies favored by USCAP are reflective of the policy directives enshrined in the Kyoto Protocol of 1997, named after the Japanese city where it was formulated. Kyoto called for participating countries to reduce their greenhouse gas emissions by about 5.2 percent below 1990 levels by the year 2012.
In the question-and-answer session following the press conference, Crane observed that some European business leaders have determined in retrospect that their cap-and-trade system did not work as effectively as it could have.
In reality, not all of the funds raised from cap and trade were devoted toward solving the “carbon problem,” according to these same business leaders, Crane said.
Larry Schweiger, president and chief executive officer of the liberal National Wildlife Federation, told CNSNews.com that the European example shows that any funds raised must go “first and foremost” to de-carbonization initiatives, otherwise a precious opportunity will be lost.
He also said that “adaptation” efforts could be worthy of funding as the U.S. transitions away from its reliance on carbon. Schweiger cited an initiative called “Architecture 2030” set up to reduce GHG emissions from buildings by 2030.
Eileen Claussen, president of the liberal Pew Center on Global Climate Change, noted in her talk that 40 percent of all GHG emissions in America come from buildings. A price on carbon will induce businesses and homeowners to become more efficient, she said.
Corporations and NGOs, which are part of USCAP, are united behind President-elect Obama in pushing for a cap-and-trade bill in 2009, James Rogers, president and chief executive officer of Duke Energy, said during the press conference. New regulations and a “technology road map” are needed to ignite research and development efforts that can “build a bridge to a low carbon world.”
Tom Borelli, a fund manager with the Free Enterprise Action Fund, is not sure there is a “united front,” at least as it applies to the corporate side of USCAP. The Free Enterprise Action Fund is “dedicated to providing both financial and pro-free enterprise ideological returns to investors,” according to its Web site.
“It seems to me the environmental activists were running the show [at the press conference] with just two corporations sprinkled in,” Borelli told CNSNews.com. “If you look at the stock performance of the USCAP members, it is nothing to write home about. The corporate entities in attendance seemed to be the ones that have gambled a lot on renewable energy.”
Borelli was particularly critical of Duke Energy.
“As a Duke shareholder, I’m outraged they didn’t learn the last time [with Warner-Lieberman] that cap and trade is the death knell to their business,” he said. “No doubt this is their last Hail Mary pass to see if they can get some sort of free carbon credits.”
With the Europeans now backing away from cap-and-trade schemes that have proven too expensive, corporate America should pay heed to their example, said Borelli.
In response to a question from CNSNews.com, some of the panelists indicated that attempts to regulate carbon emissions on the state level were helpful but not fully sufficient. (See related article.)
Claussen said there are now 24 states working on regional cap-and-trade initiatives that have been instructive and helpful. However, they should not be viewed as a substitute for federal action, she said.
“We have a lot of experiences from the states which I think will be very informative as we work on this federal cap,” Beinecke, the NRDC president said. “But we need a uniform national system, then we need a global system because this is a global threat -- it can’t be done incrementally.”
The USCAP is a coalition of 26 corporations and six non-government environmental organizations. It advocates for climate change laws to reduce greenhouse gas emissions (GHG) by at least 60 percent below current levels by the year 2050.